JBM C.S.H.B. 3589 75(R)BILL ANALYSIS NATURAL RESOURCES C.S.H.B. 3589 By: Keel 4-30-97 Committee Report (Substituted) BACKGROUND Lakeway Municipal Utility District was created in 1972. Its boundaries include more than 3357 acres. A tract of 1300 undeveloped acres that lies within the District has recently been purchased by a new owner who would like to develop the tract immediately. The District does not have bonding capacity sufficient to construct the facilities to serve the tract, and voter approval of a new bond election is highly unlikely. Granting the District the authority to exclude land from its boundaries, contingent upon the landowner paying their pro rata share of the bonds and debt service due on previously issued tax-supported bonds, provides a solution that is beneficial to both the district and the landowner and would allow development of this land. PURPOSE To grant Lakeway Municipal Utility District the authority to exclude land from its boundaries, provided that the landowner pays its pro rata share of the previously issued tax-supported bonds and debt service payments thereon. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency or institution. SECTION BY SECTION ANALYSIS SECTION 1. Defines terms used within the Act. SECTION 2. Authorizes the board to choose to hold or not to hold a hearing to consider excluding land from its boundaries and to grant exclusion of land from its boundaries on any of the grounds for exclusion included in Section 49.306, Water Code, provided that (i) the board received a petition, signed by the owners of the land to be excluded and consented to by all persons holding liens on the land, requesting exclusion of the land as described by metes and bounds, and (ii) the owners of the land pay to the district a payment and any other fees or costs required by the district. SECTION 3. Provides requirements for notice of a hearing held pursuant to this Act. SECTION 4. Provides that an exclusion of land under this Act may be done contemporaneously with a refunding of the district's outstanding bonds and that, if the exclusion is done in that manner, the only notice required is the notice specified under Section 49.304, Water Code. SECTION 5. Provides that Sections 49.307 and 49.308, Water Code, apply to all exclusions under this Act. SECTION 6. Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE SECTION 2. The original did not provide the option of a public hearing at the board's discretion, and the substitute does. Further, the substitute deletes Section 2(a)(2) of the original which authorized the board to exclude land from its boundaries on any of the grounds for exclusion included in Section 49.306, Water Code, provided that the district does not have sufficient remaining authorized but unissued bonds to construct the facilities necessary or advisable to allow the land or other property to be fully developed. The substitute also deletes Section 2 (b) and (c) of the original which defined the pro rata share of the debt and debt service attributable to the land as the percentage determined by dividing the total assessed value of the land excluded by the total assessed value of all land within the district in the year of exclusion and provided that the payment made to the district shall be treated by the district as tax revenue pledged to payment of the previously issued tax-supported bonds. SECTION 3 of the original, which provided that an exclusion of land under the Act does not impair the rights of the holders of the previously issued bonds or other obligations of the district or the obligation of the board annually to adjust the district's tax rate to provide sufficient tax revenues for debt service on all outstanding bonds, is deleted in the substitute. The new Section 3 in the substitute provides for notice of hearing. SECTION 4 of the original, which provided that an exclusion of land under the Act does not invalidate a bond election held prior to the exclusion, and that the district may continue to rely of such an election and issue the remaining authorized but unissued bonds without holding another election, notwithstanding any other law to the contrary, is deleted in the substitute. The new Section 4 of the substitute provides for exclusion and bond refunding. SECTION 5 of the original provided that Chapter 49, Water Code, applies to the exclusion of land or other property under this Act to the extent that Chapter 49 is not inconsistent with this Act. Section 5 of the substitute provides that Sections 49.307 and 49.308, Water Code, apply to all exclusions of land under this Act.